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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Ed = 0 - no response to price change
Scarcity
Perfectly inelastic
Total Product of Labor (TPL)
Consumer surplus
2. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Determinants of Demand
Decreasing Cost industry
Free-Rider Problem
Total Revenue
3. The ability to set the price above the perfectly competitive level
Law of Diminishing Marginal Utility
Comparative Advantage
Market power
Marginal Analysis
4. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Monopoly long-run equilibrium
Perfect competition
Substitute Goods
Private goods
5. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Price elasticity
Short run
Economics
Positive externality
6. The price of a good measured in units of currency
Productive Efficiency
Four-firm concentration ratio
Law of Demand
Absolute prices
7. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Economic Growth
Marginal Analysis
Total variable costs (TVC)
Public goods
8. The mechanism for combining production resources - with existing technology - into finished goods and services
Complementary Goods
Absolute prices
Allocative Efficiency
Production function
9. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Perfectly inelastic
Average Variable Cost (AVC)
Profit Maximizing Rule
Least-Cost Rule
10. TR = P * Qd
Four-firm concentration ratio
Complementary Goods
Total Revenue
Marginal Benefit (MB)
11. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Positive externality
Short run
Opportunity Cost
Spillover costs
12. All firms maximize profit by producing where MR = MC
Profit Maximizing Rule
Consumer surplus
Production function
Income Effect
13. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Price Ceiling
Constrained Utility Maximization
Price elastic demand
Public goods
14. Ei > 1
Increasing Cost Industry
Luxury
Utility Maximizing Rule
Determinants of elasticity
15. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Excise Tax
Productive Efficiency
Normal Goods
Monopolistic competition long-run equilibrium
16. The sum of consumer surplus and producer surplus
Total Welfare
Profit Maximizing Resource Employment
Perfectly competitive long-run equilibrium
Surplus
17. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Excess Capacity
Cartel
Non-collusive oligopoly
Derived Demand
18. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Total Fixed Costs (TFC)
Marginal Product of Labor (MPL)
Shutdown Point
Marginal tax rate
19. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Consumer surplus
Income Effect
Economics
Oligopoly
20. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Marginal Resource Cost (MRC)
Oligopoly
Price floor
Average Product of Labor (APL)
21. Ed = 1
Marginal Revenue Product (MRP)
Non-collusive oligopoly
Monopoly long-run equilibrium
Unit elastic demand
22. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Marginal Benefit (MB)
Perfect competition
Collusive oligopoly
Marginal tax rate
23. ATC = TC/Q = AFC + AVC
Private goods
Average Total Cost (ATC)
Law of Demand
Absolute prices
24. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Marginal Cost (MC)
Monopolistic competition long-run equilibrium
Perfectly competitive long-run equilibrium
Economic Growth
25. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Economic Growth
Monopolistic competition long-run equilibrium
Marginal Resource Cost (MRC)
Perfectly elastic
26. The difference between total revenue and total explicit costs
Diseconomies of Scale
Incidence of Tax
Accounting Profit
Allocative Efficiency
27. Ed > 1 - meaning consumers are price sensitive
Positive externality
Collusive oligopoly
Opportunity Cost
Price elastic demand
28. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits
Fixed inputs
Monopolistic competition long-run equilibrium
Shortage
Cartel
29. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Complementary Goods
Production function
Dead Weight Loss
Demand for Labor
30. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Complementary Goods
Monopsonist
Constant cost industry
Subsidy
31. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Resources
Subsidy
Long Run
Opportunity Cost
32. The most desirable alternative given up as the result of a decision
Opportunity Cost
Comparative Advantage
Monopoly
Producer surplus
33. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Long Run
Complementary Goods
Perfectly competitive long-run equilibrium
Explicit costs
34. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Oligopoly
Spillover costs
Public goods
Price elasticity
35. The imbalance between limited productive resources and unlimited human wants
Positive externality
Excise Tax
Scarcity
Average Product of Labor (APL)
36. The total quantity - or total output of a good produced at each quantity of labor employed
Perfectly competitive long-run equilibrium
Determinants of Demand
Total Product of Labor (TPL)
Short run
37. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Allocative Efficiency
Perfectly elastic
Unit elastic demand
Perfectly inelastic
38. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Public goods
Collusive oligopoly
Shortage
Income Effect
39. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Non-collusive oligopoly
Excess Capacity
Accounting Profit
Determinants of elasticity
40. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Long Run
Incidence of Tax
Law of Supply
Spillover benefits
41. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Absolute Advantage
Average Total Cost (ATC)
Marginal Resource Cost (MRC)
Negative externality
42. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Constrained Utility Maximization
Market Economy (Capitalism)
Price floor
Decreasing Cost industry
43. The practice of selling essentially the same good to different groups of consumers at different prices
Substitution Effect
Economic Growth
Price floor
Price discrimination
44. Occurs when LRAC is constant over a variety of plant sizes
Total variable costs (TVC)
Constant Returns to Scale
Marginal Revenue Product (MRP)
Monopoly
45. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Total Fixed Costs (TFC)
Positive externality
Subsidy
Cartel
46. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Perfect competition
Natural Monopoly
Least-Cost Rule
Normal Profit
47. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Law of Increasing Costs
Subsidy
Dead Weight Loss
Cross-Price Elasticity of Demand
48. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Explicit costs
Oligopoly
Constant cost industry
Spillover benefits
49. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Resources
Price discrimination
Profit Maximizing Rule
Law of Increasing Costs
50. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Price floor
Implicit costs
Short run
Increasing Cost Industry